FTC probing digital payment services amid COVID - Perceives the market as uncompetitive
With the onset of the coronavirus or COVID-19 and the increased migration from cash to electronic transactions commerce, the Fair Trading Commission, FTC, has launched a study into the payment services sector in Jamaica.
The objective of the study, scheduled to be completed by December this year, is to understand how the sector operates and assess the role and level of competition in the market, which is overseen by the central bank.
Evidence has emerged in other countries that there is a lack of effective competition in the payment services sector and that it does not adequately meet the needs of final consumers or small and medium-sized enterprises, the agency said.
It perceives that this might be the same for Jamaica, where the market only has three approved players.
Consequently, the study is also meant to identify strategies to, where necessary, drive competition in the sector, the FTC said in a notice published in its October 2020 on-line quarterly newsletter FTCNewsLine.
The country’s payments system is overseen and regulated by the Bank of Jamaica, BOJ, which has been developing guidelines over recent years for the orderly evolution or epayment and mobile money services, amid the migration from cash to electronic transactions. More recently, the central bank has been focussing on driving tech innovations in the sector an attempt to deepen the market and provide more options for Jamaica’s large unbanked population.
“Even before COVID, the FTC had noticed a dramatic increase in the pace of e-commerce,” Competition Bureau Chief at the FTC, Dr Kevin Harriott, said in an interview with the Financial Gleaner regarding the agency’s interest.
“We want to get an understanding of the payment system that supports e-commerce, he said.
Harriott said its the FTC’s first look into the sector and their work would therefore be exploratory.
However, it’s proceeding on a hunch that competition is inadequate given that only three companies are currently authorised by the central bank, BOJ, to engage in electronic retail payment services, Harriott said, adding that the FTC will ultimately go on to recommend measures to improve the digital payment system in Jamaica.
“We saw if before, but we think COVID will accelerate the process – transitioning people from cash or cheque towards electronic,” the Competition Bureau Chief said. “A lot of businesses are going online now and we anticipate that this could be a big issue and we need to stay ahead of the ball,” he added.
BOJ began rolling out guidelines for electronic retail payment services in February 2013, with revisions as the years progressed. In March of this year, the central bak announced that it was withdrawing the ERPS 2 guidelines, the most recent revision, and replacing them with the Fintech Regulatory Sandbox Guidelines, through which it would collaborate with tech companies and payment services providers on product innovations.
Currently, the payment services providers licensed by the BOJ are: Alliance Payment Services Limited, provider of ePay; Sagicor Bank Jamaica Limited, operator of Sagicor MyCash; and National Commercial Bank Jamaica, operator of NCB Quisk.